The next battle for US aid is about to begin

WASHINGTON — The United States global development community is bracing for the release of a Trump administration foreign assistance review that is expected to set the tone for another round of harsh White House budget proposals in the coming months.

The classified review has been kept under close wraps by administration officials, even to the point that members of Congress who actually oversee development spending have received little to no information about it.

Three development leaders and former U.S. aid agency executives applaud the White House undertaking of a foreign assistance review — but express concern that current thinking could hurt national interests.

“There has not been a scintilla of consultation with the Senate panel that funds the State Department and foreign operations, on either side of the aisle,” David Carle, spokesperson for Senator Patrick Leahy, the top Democrat on the Senate committee that funds the Department of State and U.S. Agency for International Development, told Devex in an email.

“This pattern unfortunately is not new for this administration. If that opacity continues, the likely reaction will be entirely predictable whenever it is sent to Congress.”

What few signals the administration has sent about the process have been mixed.

“The United States is the world’s largest giver in the world, by far, of foreign aid. But few give anything to us. That is why we are taking a hard look at U.S. foreign assistance. That will be headed up by Secretary of State Mike Pompeo,” he told the global body.

“We will examine what is working, what is not working, and whether the countries who receive our dollars and our protection also have our interests at heart.”

According to people familiar with the review process, Harrington is still leading it at NSC, and Devex has been unable to confirm whether Pompeo ever took over, as Trump suggested he would.

It makes sense that NSC would manage the process, since the council’s function is to coordinate complicated interagency interests that would have to align under a broad statement of administration policy, such as the one this review is supposed to put forward. That is not necessarily good news for the U.S. development community, however.

When the Trump administration released its national security strategy in December 2017, NSC was made up of a completely different team with a very different outlook. Then-National Security Adviser H.R. McMaster and deputies Dina Powell and Nadia Schadlow, who presided over that process, were regarded as relatively moderate in their foreign policy views.

NSC’s political outlook shifted after Trump replaced McMaster with John Bolton, a noted skeptic of foreign aid and multilateral cooperation, who in turn assembled his own team. U.S. development leaders have grown increasingly worried about the kind of mark Bolton’s team might try to make.

Compounding that uncertainty is the fact that USAID Administrator Mark Green is in the midst of a strategic rethink of his own. Green is working to construct a new conceptual framework for America’s partnerships with developing countries, one dedicated to promoting “self-reliant” countries, capable of owning their “development journeys.”

A well-placed source with knowledge of high-level meetings that have taken place about the review — but who spoke about a classified process on the condition of anonymity — told Devex that Bolton and those who share his views are not content with the changes Trump’s development leaders, including Green, have ushered in so far. They view Green’s reorganization plans as too “incremental” and reflective of an inadequate “status quo,” the source said.

“The word I keep hearing is ‘disruption.’ They want more disruption,” the source said.

Budgets and principles

The review is expected to be completed in time to inform the next White House budget proposal process, which will request funding for the 2020 fiscal year. That could mean the review will be released this month since the Office of Management and Budget is expected to hand agencies its decisions about their funding levels — known as “passbacks” — sometime around the upcoming Thanksgiving holiday, the source said.

The Trump administration’s first two budget proposals — for 2018 and 2019 — both called for deep cuts to U.S. foreign assistance. The 2020 budget request is expected to seek similar, if not more significant cuts.

What is different this time, the source said, is that the White House proposal may be accompanied by the “rationale and justification” of this foreign assistance review. The overall picture — deep cuts backed by a statement of policy — could add up to “a more menacing signal coming from this administration.”

Initial discussions about the review focused around 10 principles, according to the source with knowledge of the meetings, and the broad outlines of some of them have made the rounds in U.S. development circles.

The Trump administration wants to condition bilateral assistance on countries’ U.N. voting records, along with other criteria for delineating which nations are and are not America’s “friends,” a message Trump previewed in his State of the Union address in January.

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The review is expected to express a general desire to move away from grant-based assistance, in favor of loans or other market-based approaches.

Under the Trump administration, the U.S. aid agency is taking a more aggressive stance toward China's role in developing countries. "If you decide to work with China, it is bad," a senior USAID official said.

In light of White House concerns that countries are somehow using U.S. foreign assistance to repay Chinese loans, the review is expected to look unfavorably at providing assistance to countries with significant Chinese debt.

The review’s architects have also expressed skepticism about the link between U.S. foreign assistance and countering violent extremism, according to the source.

Many in the development community worry that the White House will also seek a broad pullback in support for international organizations such as multilateral development banks.

“If someone had the idea of selling U.S. shares in multilateral development banks to someone else, would you agree that would be a colossally stupid idea?” Dan Runde, senior vice president at the Center for Strategic and International Studies, asked suggestively at a panel discussion about the review in Washington, D.C., on Wednesday.

Two different faces

Tuesday’s midterm election introduced yet another variable into the equation. Several of the most prominent lawmakers who oversee U.S. foreign affairs programs will see their positions shift in 2019.

Sen. Bob Corker, a Republican from Tennessee who has been a supporter of development programs and a bulwark against the White House’s efforts to dismantle them, is retiring. His likely replacement as chair of the Senate Committee on Foreign Relations, Idaho Republican Jim Risch, has been far less vocal about the value of U.S. aid.

“We really don’t know where [Risch] is,” said George Ingram, a senior fellow at the Brookings Institution. “He’s definitely not Bob Corker.”

At the same time, Democratic control of the U.S. House of Representatives will likely create yet another firewall between the Trump administration’s budget requests and reality. Representative Nita Lowey will likely take over as chair of the House Appropriations subcommittee that oversees development budgets, while Rep. Eliot Engel is poised to chair the House Committee on Foreign Affairs. Both are longtime development supporters with newfound leverage over the budget process and foreign policy.

In the first two years of the Trump administration, U.S. development experts have often pointed out that the White House has sent contradictory messages about its foreign assistance programs.

On one hand, the White House has sought crippling reductions in “soft power” spending, while President Trump has repeatedly doubted that America gets anything in return for its assistance. On the other hand, administration officials are quick to recognize that they must push back against China’s advances in developing countries, and the White House embraced the creation of a new development finance institution with that goal in mind.

Meanwhile, the U.S. development community has largely welcomed Mark Green’s efforts to restructure USAID according to his vision of “self-reliant” partners, based on verifiable, third-party indicators that track their progress. That is a rather different approach than a foreign aid system built to reward America’s “friends” and punish its “enemies.”

The result is an administration that seems to present lawmakers on Capitol Hill with a “schizophrenic” picture of the context in which its foreign aid programs operate, said Lester Munson, a lobbyist with the BGR Group and former staff director of the Senate Committee on Foreign Relations

“The Hill sees two different faces from this administration,” Munson said.

It remains unclear how or if those two faces will find a way to merge through this foreign assistance review. The reform process that Green is leading at USAID and the review process underway at NSC appear completely disconnected from each other.

According to the source with knowledge of discussions about the review, there is a general sense that it is “not something that can harmonize with what [Green] is trying to do.”

Given the lack of information from the White House about the foreign assistance review, members of the U.S. development community are left wondering what the final product will ultimately be. Some have alluded to internal discussions about a potential presidential policy directive, which would serve as a statement of the administration’s development vision and priorities.

In September 2010, then-President Barack Obama signed a presidential policy directive on global development, the first of its kind. That directive elevated development to a core pillar of U.S. national security, alongside diplomacy and defense. While this White House has kept its intentions closely guarded, a Trump administration policy directive on development would likely send a different message.

About the author

Michael Igoe is a Senior Reporter with Devex, based in Washington, D.C. He covers U.S. foreign aid, global health, climate change, and development finance. Prior to joining Devex, Michael researched water management and climate change adaptation in post-Soviet Central Asia, where he also wrote for EurasiaNet. Michael earned his bachelor's degree from Bowdoin College, where he majored in Russian, and his master’s degree from the University of Montana, where he studied international conservation and development.

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